How much do you think the top producers are worth? i.e. Timbaland...

[NajdorfDefense]

[ QUOTE ]
El D,
Easily could have higher rate of return based on what he's done with his money.


[/ QUOTE ]

No, not easily. He still has to pay tax on gains. That is virtually unavoidable, unless you are Blackstone/KKR and qualify for special tax treatment and can defer it temporarily. He still gets K-1s whether he's in HF, VC, PE or Real Estate.

In addition, assuming PW does have a smart, savvy manager, they will have parked a large minority in munis and fixed income, so that if he ever suffers a total loss of income/gets hit by a bus/no longer popular, he can live off the interest. If you talk to GS or the like, they'll typically say put 40% in munis for safety and lower volatility, then you can get aggressive with the other 60%.

Munis 0.4 x 0.05% = 2% after-tax.
Other 0.6 x 0.12% = 7.2% x (1-0.30) = 5% after tax
Total = 7%. I assumed 8% Net in the example above. [or 14.3% on aggressive investments - very high!]
This is a very typical asset allocation for celebs, sports figures, founders, and the like.

edit - really good managers charge high performance fees, i.e. 20%+ of profits plus 1-2% a year mgmt fees. The numbers I quoted above are net of that, which would require 16-20% gross returns. Very, very hard to do.

If you are saying it is *possible* he is making 40% gross a year in private investments, I agree. It is far, far from *easy* however.

[ QUOTE ]

Likely has asset value outside of just the cash he has banked from his income/investments.


[/ QUOTE ]

Yes, and I said that specifically at least 2x.

I don't the the value of his shoe brand, for instance. However, industry data, public filings, and other research doesn't show him having a significant windfall in those areas as of yet.
If you want to assume $40m from income and earnings and another $35mm from private holdings that no one knows about that are yet unrealized, then fine.

He may get to $150-200mm or more in 5-10 years, of course. He's just not there yet. I'm always rooting for more rich people!